Question 1

The Uruguay Round of trade negotiations is best described by which of the following?

Accepted Answer

The Uruguay Round of trade negotiations was the most ambitious global trade agreement ever negotiated. It covered a wide range of issues, including tariffs, non-tariff barriers, intellectual property, services, and agriculture, among others. It involved 123 countries and was considered the most comprehensive trade agreement in history.

Note: Option B is incorrect because GATT was created in 1947, and the Uruguay Round only updated and expanded it. Option C is also incorrect because the Uruguay Round actually decreased tariffs and lowered trade barriers. Option D is incorrect because the Uruguay Round was a global trade agreement, not just limited to South American countries.

Question 2

In 1997,Russia and Ukraine exported carbon steel plate into Canada at a price much lower than the countries charged for the identical steel in their home markets.Russia and Ukraine were engaged in which of the following activities?

Accepted Answer

The activity described in the scenario is dumping, which refers to selling goods in a foreign market at a lower price than the price charged in the home market. This is a form of price discrimination and can harm domestic producers in the foreign market.

Question 3

When a French company brings its patents on digital telephone switches,and AT&T provides the marketing know-how to a business relationship,which of the following arrangements is occurring?

Accepted Answer

A joint venture involves two or more companies coming together to form a new entity, with shared ownership and control, to pursue specific business opportunities. In this scenario, the French company and AT&T are collaborating to bring their respective strengths to create and market a new product.

Question 4

The BC Cherry Growers sells much of its locally grown produce to Taiwan.Which of the following would be the easiest and least expensive way for the growers' association to sell to global markets?

Accepted Answer

Exporting would be the best and easiest way for the BC Cherry Growers to sell to global markets, as it involves simply selling their local produce to foreign buyers without the need for complex licensing or importing processes. Exporting also tends to be more cost-effective than hiring contract manufacturers in foreign countries.

Question 5

Capital Radio PLC,the United Kingdom's biggest commercial radio company announced in 2002 that it would cooperate with Walt Disney Co.to create a radio network for children under the age of 16.The company will broadcast to a potential audience of 25 million under the name Capital Disney.This new radio network will be created as the result of which of the following arrangements?

Accepted Answer

The best choice for the arrangement between Capital Radio PLC and Walt Disney Co. is a joint venture, as both companies are working together to create a new entity (Capital Disney) that will serve a specific market.

Question 6

Active ownership of a foreign company,with direct investors having either a controlling or a large minority interest in the company,is best described by which of the following activities?

Accepted Answer

Direct foreign investment involves owning a controlling or large minority interest in a foreign company, which is the exact description given in the question. The other options, such as an international corporation or cooperative, do not specifically refer to owning a controlling or large minority interest in a foreign company. A limited partnership may involve investment in a foreign company, but it does not necessarily imply a controlling interest.

Question 7

Which of the following agreements dramatically lowered trade barriers worldwide and created the new World Trade Organization (WTO)?

Accepted Answer

The Uruguay Round was a trade negotiation conducted under the General Agreement on Tariffs and Trade (GATT) in the 1980s and 1990s. It resulted in the creation of the World Trade Organization (WTO) and the agreement of the participating countries to significantly lower trade barriers and increase international trade.

Question 8

Which of the following organizations were formed with the original purpose of helping build infrastructure in developing countries and helping relieve the debt burden of these countries?

Accepted Answer

The World Bank was formed with the original purpose of helping build infrastructure in developing countries and helping relieve the debt burden of these countries. The other options mentioned do not have this specific purpose.

Question 9

U.S.plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries,a Japanese company,to use its trademarks,patents,and other proprietary knowledge to manufacture F-15 fighter planes.Mitsubishi Heavy Industries pays McDonnell-Douglas.This is an example of which of the following activities?

Accepted Answer

This is an example of licensing. McDonnell-Douglas has allowed Mitsubishi Heavy Industries to use their proprietary knowledge in exchange for payment.

Question 10

Pierre Cardin gives technical advice on textile manufacturing to China and in exchange receives silk and cashmere.This is an example of which of the following?

Accepted Answer

This is an example of countertrade, where goods or services are exchanged for other goods or services instead of cash payment. In this case, Pierre Cardin is providing technical advice on textile manufacturing to China in exchange for silk and cashmere.

Question 11

Which of the following is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services?

Accepted Answer

A countertrade is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services. This can include bartering or exchanging goods and services for other goods and services, rather than using traditional currency as payment. The other options (B, C, and D) do not accurately describe this type of trading arrangement.

Question 12

Which of the following activities is the least costly and least risky method for selling a product on the global market?

Accepted Answer

Exporting is the least costly and least risky method for selling a product on the global market as it does not require significant investment in the foreign market. It involves selling products made in the home country to customers in another country. Licensing, franchising, and contract manufacturing all involve significant investments and risks as they require a greater interaction with the market and the local regulations of the foreign country.

Question 13

By using split-run magazines (modifying the U.S.edition so they contain Canadian ads),U.S.magazine publishers can offer lower rates to advertisers and sell the magazines for less money than Canadian publishers can.According to the CMPA,the U.S.magazine publishers are engaged in which of the following?

Accepted Answer

The scenario described here fits the definition of "dumping" where foreign companies sell products in a market at a lower price than the normal value of the product in their home market, to gain unfair advantage and capture the market share. The U.S. publishers are selling their magazines in Canada at lower rates than the Canadian publishers and this has been viewed as a form of dumping by the Canadian Magazine Publishers Association (CMPA).

Question 14

An enterprise in which two or more companies or investors (including governments)share ownership of a business and its property rights is known as which of the following?

Accepted Answer

A joint venture is an enterprise in which two or more companies or investors share ownership of a business and its property rights. A cooperative involves shared decision-making among members, an international partnership implies a partnership between two or more companies from different countries, and a cartel is a group of companies that collude to manipulate a market.

Question 15

Which of the following statements best describes dumping?

Accepted Answer

Dumping refers to the practice of exporting products at a price that is lower than the cost of production or the price charged in domestic markets. Most industrialized nations have passed laws to make dumping illegal because it can harm domestic producers and distort international trade.

Question 16

Grand Metropolitan,a British company,purchased North American-based Pillsbury Co.in order to expand its product line and the market for its existing consumer products.Metropolitan's purchase was an example of which of the following activities?

Accepted Answer

Grand Metropolitan's purchase of Pillsbury Co. involves direct foreign investment, which refers to a company's investment in and management of operations in a foreign country. In this case, the British company expanded its market presence by acquiring a company based in North America.

Question 17

Japanese automobile manufacturer Mazda began production of the Premacy SUV in Haikou,China,at a plant it built in the Chinese province and expected to make 20,000 autos in 3 years.Mazda is using which action to engage in global trading?

Accepted Answer

Mazda is engaging in direct foreign investment by building a plant in China and producing cars there. This is a form of global trading where a company invests directly in a foreign country and establishes a physical presence in that country to conduct business operations.

Question 18

A domestic company may decide to sign an agreement for the production of its goods by an established foreign manufacturer.Such private-label manufacturing by a foreign company is known as which of the following?

Accepted Answer

Contract manufacturing is the practice of hiring a foreign manufacturer to produce goods on behalf of a domestic company. It is also known as private-label manufacturing or outsourcing.

Question 19

The World Trade Organization (WTO)is best described by which one of the following?

Accepted Answer

The WTO is an organization consisting of 164 member countries that have signed various trade agreements, including the Uruguay Round. It is not controlled by any single member, but rather operates on a consensus-based decision-making process. The WTO's main objective is to reduce trade barriers and promote free and open trade around the world, making it the world's most powerful institution for achieving these goals. The WTO established an effective dispute settlement procedure in 1995, which has been utilized in numerous trade disputes between member countries.

Question 20

The Sara Lee Company sells the Hanes brand of hosiery in North America.The manufacturer of this hosiery brand in Great Britain sells it under the brand name of Pretty Polly.The Sara Lee Company is using which of the following activities to broaden its global marketing base without investing in overseas plants and equipment?

Accepted Answer

The answer of The Sara Lee Company sells the Hanes...

Quiz 5: International The Global Marketplace